News Analysis – December 2017

General News Summary

Jerusalem, Reality and Miscalculation

President Donald Trump’s statement recognizing Jerusalem as Israel’s capital appeared to be a long-overdue recognition of fact: for almost 70 years of Israeli independence, the city has been the country’s capital, the seat of its governing institutions including the Knesset, its legislature, the Supreme Court and the Office of the Prime Minister. Those facts were apparent as well to the foreign diplomatic missions which largely due to international pressure maintained their embassies in Tel Aviv, and back home in the capital cities of the countries they represent, and in states that have no diplomatic relations, formal or informal with the Jewish state. They are apparent to every one of the 128 countries voting for the December 21 UN General Assembly resolution expressing “deep regret” for the statement and saying that any changes in Jerusalem’s status were invalid.

As might be expected, Trump’s declaration, which pointedly did not refer to Jerusalem’s specific boundaries, reaffirmed U.S. support for the status quo of Muslim religious control of the Temple Mount, and avoided references which might prejudice Palestinian claims, was awarded an enthusiastic response in Israel and among many of Israel’s supporters around the world. Prime Minister Benjamin Netanyahu called it a “festive moment” for Israelis of every political hue, equating it with other monumental events including the 1917 Balfour Declaration paving the way for establishment of a “national home” for the Jewish people and Israeli independence in 1948.

On the other side of the divide, few shared Netanyahu’s jubilation. Palestinian President Mahmoud Abbas said the statement disqualified the U.S. from any role in Israeli-Palestinian relations and that the Palestinian Authority would not consider any peace plan put forward by the Americans. The Palestinian leader also said he would not receive Vice President Mike Pence, whose Christmas-time visit was canceled.

Abbas’s condemnation, accompanied by violent protests in the West Bank and Gaza was echoed sometimes in milder terms across the Arab world. Perhaps significantly, King Salman of Saudi Arabia appeared to fall short of outright condemnation by saying only that he supported “the legitimate right of the Palestinian people in establishing an independent state with East Jerusalem as its capital,” though the Saudis were one of the 128 nations voting for the UN General Assembly resolution condemning Trump’s decision. (An open question: Were the Saudis aware of Trump’s imminent announcement? Recent intensive Riyadh-Washington contacts include two visits to Saudi Arabia by Trump’s son-in-law and adviser Jared Kushner, for meetings with Crown Prince Muhammad bin Salman, a dominant figure in the regime.)

It’s far from clear what the Trump Administration intended to accomplish with the Jerusalem statement. Its 68-page National Security Plan, made public on December 18, explicitly downplays the importance of the Israeli-Palestinian conflict. It says: “For generations the conflict between Israel and the Palestinians has been understood as the prime irritant preventing peace and prosperity in the region. Today, the threats from radical jihadist terrorist organizations and the threat from Iran are creating the realization that Israel is not the cause of the region’s problems. States have increasingly found common interests with Israel in confronting common threats.”

It must be noted that the U.S. resolution is only declaratory, with little operative significance and Trump’s promise to move the U.S. embassy from Tel Aviv to Jerusalem isn’t going to happen overnight. The only immediate consequence might be that Jared Kushner, who’s been busy preparing a peace plan has more time and that Pence can reschedule his Mideast trip.

Syria Questions

What are Iran’s plans for post-civil war Syria? To what extent will Israel tolerate an Iranian presence in Syria, and if so, how near its borders? These are some of the unanswered questions as the Syrian civil war winds down, in light of Israeli bombing raids against Iranian weapons plants on Syrian territory, and how far from its border will Israel tolerate the presence of Iranian military forces.

As is its practice, Israel does not acknowledge air attacks into Syrian territory, reports of which are attributed to foreign sources. But at least one large arms plant and several anti-aircraft batteries have been hit from the air in recent months. Israeli sources also indicate that construction of other arms-making facilities in Syria and Lebanon has come to a halt.

According to an assessment published in Haaretz newspaper, Israel believes that there are currently several hundred Iranian Revolutionary Guard combatants in Syria, some serving as advisers and others as commanders of Syrian and Shi’ite militias. So far, none of these Iranians have been seen close to Israel’s Golan Heights border with Syria.

Israel’s short-term objective, according to this assessment, is to deny an Iranian presence in southern Syria and reduce the chances for establishing bases and a port in northern Syria. This is the backdrop for various threats by Netanyahu, Defense Minister Avigdor Lieberman and others, now backed by a flurry of diplomats and intelligence officials being sent to the U.S. and European capitals to explain Israel’s position.

On The Attack

Prime Minister Benjamin Netanyahu, the subject of police investigations in at least three corruption cases, continues to deny allegations of wrongdoing against him, saying the probes “will find nothing because there is nothing.” But after seven separate questioning sessions by investigators, the prime minister has sharpened his criticism of the law enforcement process and upped the volume of claims that he is the victim of a witch hunt and that the media are parties to a conspiracy to drive him out of office.

In a refrain striking in its similarity to another embattled political leader, Netanyahu belittled the investigators by telling a gathering of Likud party loyalists in mid-December that most police investigations do not result in indictment, and that in any event weekly mass protests against him and corruption are violating the law. (Among targets of the protesters: the so-called “recommendations law,” which seems tailored to protect the prime minister by denying public disclosure of police investigations.

That controversial status hasn’t passed yet. And according to press reports, investigations in two cases have been completed and a police report is pending. One case involves allegedly illegal gifts lavished on Netanyahu and his wife Sara by U.S.-based Israeli film producer Arnon Milchan, allegedly in exchange for Netanyahu’s intervention with former secretary of state John Kerry to arrange an extension of Milchan’s U.S. visa and intervention favoring Channel 10 when Milchan was a part owner of the TV station. The second involves recorded conversations between Netanyahu and newspaper publisher Arnon (Noni) Moses on a proposed deal in which the prime minister would help restrict the activities of a rival paper in exchange for more favorable coverage in Mozes’s Yediot Aharonot publication.

A third investigation, into a multi-billion euro purchase of submarines in Germany, is still under way. At this stage Netanyahu is not a suspect in that affair, but two of his closest associates, his relative and lawyer David Shimron, who represents German shipbuilder ThyssenKrupp, and long-time personal envoy Yitzhak Molco, have talked to police about possible conflicts of interest. (Netanyahu has named national security adviser Meir Ben-Shabbat to replace Molcho as chief diplomatic emissary.)

Netanyahu Ally Leaves Post

David Bitan, an outspoken ally of Prime Minister Benjamin Netanyahu, resigned his post as parliamentary whip of the ruling coalition in late December. Bitan, who will remain a Knesset Member, is under police investigation for corruption, including accusations that he accepted bribes from organized crime figures in his hometown of Rishon Lezion when he was deputy mayor, and of rigging a construction tender. His successor, MK David Avidan, is also an avid Netanyahu supporter.

Ofer Buys Atletco Share

Idan Ofer, the London-based Israeli businessman whose holdings include the Israel Corporation and Kenon Holdings investment companies, has purchased a stake in Spanish football club Atletico Madrid. The $59M investment, said to be 10-15% of the club’s equity, is based on a valuation of around $700M for the team. According to Globes business daily, Atletico, one of Europe’s top teams in recent years, already has an Israeli connection with Plus500, the online trading company whose name appears on the team’s shirts.

No Myanmar Arms Sales

Israel’s Foreign Ministry has categorically denied that the country is currently selling arms to Myanmar. In an unusual late-November statement, the ministry said that Myanmar Ambassador Meung Meung Lynn had retracted and apologized for a statement about arms sales made in an interview with Israel’s Army Radio. Israel, the ministry said, had sold arms to Myanmar in the past (including Super Dvora patrol boats, in 2015), but no longer does so.

Aid Turned Down

The government of Bangladesh has turned down an Israeli offer of humanitarian aid for Rohingya Muslims from Myanmar, according to a report in Yediot Aharonot. In a polite communication to Israel’s Foreign Ministry, Bangladeshi authorities said the offer was appreciated, but could not be accepted because it was too sensitive.

Cinema Cooperation

Israel and India are discussing an agreement to facilitate coproduction of films between the two countries, according to Haaretz. Evidence of the Israeli industry’s contacts with Bollywood were evident, the paper said, in the recent Indian production of War Prisoners, based on the successful Israeli TV series Hatufim.

Pact with NATO

Israel and NATO have signed an agreement for the protection of classified information. The agreement was signed recently by Wendy Bashnan of the North American Treaty Organization’s security office and Nir Ben Menashe, the Defense Ministry security chief. At the same time Aharon Leshno Yaar has been given the post of Israeli ambassador to NATO, in addition to serving as the country’s ambassador to the European Union.

Pipeline to Italy

Energy ministers from Israel, Cyprus, Greece and Italy, in early December, signed a memo of understanding for eventual construction of a 2,100-km. natural gas pipeline between Israel and Italy. The proposed underwater pipeline, at a projected cost of NIS 25B, is projected for 2025.

Poverty Figures

An estimated 1.8 million Israelis, including over 800,000 children, live below the poverty line, according to figures released by the National Insurance Institute in late November. The NII said that Israel’s poverty situation remains “grave” compared to the rest of the Western world, even though there has been a statistical improvement of an aggregate 1% over the past two years.

Technion Top Ranking

The Technion-Israel Institute of Technology was ranked No. 1 in the world in teaching digital skills to its graduates and preparing them for the digital workplace, in rankings published by the London’s Times Higher Education Journal. The Haifa-based institution was followed by University College London, 2nd and Korea’s KAIST in 3rd. MIT, the only American university in the top 10, was 6th.

More Destinations

European budget airline EasyJet is adding four new destinations to its schedule of Israeli flights – Lyon, Bordeaux and Nice in France, and Berlin’s Tegel Airport. The airline already flies to 11 cities on the Continent.

Replenishing the Lake

Israel’s Water Authority is working on plans to replenish Lake Kinneret by pumping desalinated water into it. According to Israeli media reports, the authority deems the move necessary after five exceptionally dry years have endangered the Kinneret, also known as the Sea of Galilee, the source of about 25% of Israel’s annual supply of potable water. Cost of the project, which is due to be carried out within two years, is about NIS 1B ($300M). In a warning issued in October, the authority said that the Kinneret was at a dangerously low level, and was expected to reach what it called “the lowest level ever recorded.” Underground aquifers also were at dangerously low levels, the authority added.

Hotel Culture Boost?

Israel’s hotel culture, where an estimated 80% of all employees have no formal professional training,- is due for an upgrade next year, when the prestigious École hôtelière de Lausanne, the Swiss school widely regarded as the world’s premier institution for hospitality-management training, begins offering courses in Jerusalem next year. The project is supported by the Jerusalem Development Authority and the ministries of Tourism and Jerusalem Affairs.

India Festival

More than 2,000 people attended the mid-December India Festival in Ashkelon, according to reports from the coastal city’s municipality. Among the performers at the event, considered the central happening of the Israeli-Indian community, was a theater group from Mumbai.

The Economy

Teva Troubles Worsen

Teva Pharmaceuticals, the financially troubled Israeli Big Pharma, plants to cut its 60,000-strong global workforce by about 20% as part of new CEO Kare Schultz’s streamlining plan. In a mid-December meeting, Schultz turned down a plea by Prime Minister Netanyahu and three other ministers to keep the company’s two Jerusalem plants, which employ about 1,100 of the 1,700 Israeli workers Jerusalem and Petah Tikva-based Teva plans to lay off.

Teva, which was founded in 1901, has been saddled with nearly $35B in debt since acquiring Allergan’s Actavis generic drug business for $40.5B. The last of its patents on its best-selling Copaxone multiple sclerosis drug has also expired, cutting sharply into its biggest single source of profits.

Teva made a series of changes after Schultz became CEO. In a letter to Netanyahu after he joined the company, Schultz said action was needed to ensure Teva’s future. “It is clear that without taking drastic steps in the coming weeks and months, the company will be increasingly vulnerable to potential takeover by global financial institutions or activists with their own agendas and the risk is real,” he wrote.

GDP Up 4.1%

Israel’s Gross Domestic Product rose by annualized rate of 4.1% in the third quarter of 2017, according to preliminary estimates of the Central Bureau of Statistics. The growth, driven by increases of around 8% in fixed asset investment and private consumption, far exceeded the second quarter’s 2.5% and 0.9% of the first quarter.

CPI Up 0.3%

October’s Consumer Price Index rose by 0.3%, but inflation for the year so far is substantially below the budgeted target of 1%-3%, the Central Bureau of Statistics announced in mid-November. The CBS said that prices were up only 0.2% in the 12 months from September 2016, and 0.6% since the start of 2017. Housing prices, which are calculated separately by the CBS, rose by 4.2% between August 2016 and August 2017.

Unemployment Up – Slightly

Israel’s unemployment increased to 4.2% in October, up from 4.1% the previous month, the Central Bureau of Statistics reported. Of the 4.017 million employed people, 2.027 million were men and 1.824 million were women. Total unemployed amounted to 167,000.

Deficit Lower than Expected

The government deficit for the 12-month period from December 2016 to November 2017 amounted to 1.7% of Gross Domestic Product, substantially lower than the 2.9% target in the 2017 budget. A large part of the difference is attributed to tax collections, which for the first 11 months of 2017 were about NIS 20B higher than for the parallel period in the previous year.

Elovich Out

Businessman Shaul Elovich has stepped down as chairman of Bezeq, Israel’s largest telecom. Elovich is the central figure in a Securities Authority investigation of possible fraud and other offenses in connection with Bezeq’s merger with the Yes satellite TV provider and with SpaceCom Satellite Communications, and with illegal activities involving Shlomo Filber, now director general of the Communications Ministry. The Securities Authority has recommended that Elovich be indicted in the case.

Bribery Charges

Police have recommended charging reserve brigadier general Avriel Bar-Yosef with accepting bribes when he was deputy head of the National Security Council. The State Prosecutor’s Office now must decide whether to indict Bar-Yosef for accepting a bribe to advance German businessman Michael Herzog’s interests in Israel. Bar-Yosef is also under investigation for his possible role in the German submarines purchase.

Indian, Greek Gas Bids

Indian and Greek groups are being awarded licenses for the exploration for gas and oil in Israel’s economic waters, according to the Energy Ministry. The winning bidders are an Indian consortium of Indian firms including ONGC Videsh, Bharat PetroResources, Indian Oil Corp and Oil Indi, and Energean of Greece, which is already developing the Karish and Tanin fields it bought from Israel’s Delek Group.

Wave Power

Yam Pro, based in Kfar Saba northeast of Tel Aviv, has signed a $180M agreement with a member of India’s Tata Group, to build a 150-megawatt power station in Ghana, which will be driven by wave energy. The agreement is with Indian company Shapoorji Pallonji Group. Yam Pro will build systems for Ghana’s local electric company powered by the harnessing of ocean waves. In the first stage, the system is due to produce 10 MW of power, to be expanded to 150 MW in later stages.

New Budget Head

Shaul Meridor, former director general of the Energy Ministry, has been named the Treasury’s new budget director. He replaces Yoel Naveh.

Economic Advice

The Indian government has named Israel’s Dor Group to advise it in the integration of methanol into the country’s economy. Dor, which is headed by Gil Dankner, says that methanol, a pure molecule derived primarily from natural gas, can also be produced from renewal substances such as urban waste and is environmentally safe and cleaner than natural gas.

U.S. Moves

New U.S. tax laws may make it more attractive for Israeli companies to set up business in the United States, a number of corporate lawyers have told Haaretz. Lower corporate taxes, they say, could be a determining factor for American investors.

Finance & Investment

Fundraising

Israeli start-up companies are well on their way to exceeding the record $4.8B they raised in 2016, according to an IVC survey. The companies raised $3.8B in the first nine months of 2017, topping that off with an estimated $550M in October and $300M in November. The total raised in the first 11 months of 2017 amounts to $4.65B, only $150M short of the $4.8B raised in all of 2016.

Kochs Lead Insightech Investment

A company owned by brothers Charles and David Koch is leading an investment round of $75-$150M in Israeli medical equipment firm Insightech, a developer of non-invasive equipment for treating tumors. The Kochs, among the world’s richest people and major donors to U.S. right-wing causes, are based in Wichita, Kansas. The investment is at a company value of $460M.

Rafael Gets Central Bank Contract

Rafael Advanced Defense Systems has been chosen to supply a cyber defense solution for the Bank of Israel‘s central credit register. The solution will be supplied in conjunction with Matrix IT, the contractor for the establishment and maintenance of the central bank’s national credit information-sharing system. Value of the deal was not announced.

Mergers & Acquisitions

Alibaba-Visualead

Alibaba, the Chinese e-commerce giant, is purchasing Visualead, a Herzliya-based developer of virtual reality technology. Purchase price is in the $30-$50M range, according to the Globes business daily. Visualead is expected to become the basis of the Tel Aviv center of Alibaba’s DAMO software development program, in which the Chinese firm plans to invest $15B over the next three years.

Chengdu-Ioptima

The Chengdu Kangong Pharmaceutical Group is purchasing Israel’s IOPtima from Biolight Israeli Life Investments for a reported $56M. IOPtima, which makes a laser-assisted surgical product for treating glaucoma, is headquartered in Tel Aviv and was a subsidiary of Biolight, founded by former Teva Pharmaceuticals chairman Israel Makov. According to press reports, the Chinese purchaser specializes in optical products and has a market cap of about $6B.

Toyota Invests in Sensor Firm

Toyota is one of the investors in the $5.1M first financing round of Guardian Optical, a Tel Aviv-based start-up developing sensors that detect small movements in the interior of vehicles. Possible applications for the sensors include the monitoring and control of seat belts, air bags and other safety or rider-convenience accessories using single rather than multiple detection devices.

Continental-Argus

Continental AG of Germany has purchased Argus Cyber Security, whose technology protects connected vehicles against hacking. Purchase price was not announced, but reportedly is in the $400M range. Tel Aviv-based Argus was founded in 2013 by three veterans of the IDF’s famous 8200 technology unit; Continental, based in Hannover, Germany, is one of the world’s largest suppliers to automakers, with annual revenues topping €400M.

Lear-Eco

Lear Corporation, a supplier of automotive electrical systems based in Southfield, Michigan, is acquiring Israel’s ECO Technologies for an undisclosed sum. Lear, with operations in Tel Aviv and San Mateo, California, develops GPS technology for autonomous vehicle applications.

Soluto-Drippler

Soluto has acquired Drippler, a Tel Aviv-based start-up which develops content recommendation and support apps for smartphones, for an estimated $3M. Soluto, also an Israeli company, is a subsidiary of U.S.-based Asurion.

IDE Sale Completed

Israel Chemicals has completed the sale of its 50% share of desalination specialist IDE Technologies for $167M, as part of its divestment from non-core businesses. The buyers: Clal Insurance, a Teachers Union provident fund, and IDE president Avraham Felber. The Delek Group still owns the other 50% of IDE equity.

Fimi buys Imagesat Stake

FIMI, the Israeli private equity fund, has is acquiring 53% of ImageSat International from Israel Aerospace Industries for $40M. According to the Israel Defense website, pending approval of antitrust authorities, the deal also includes FIMI’s future purchase of the new Eros C observation satellite from IAI.

Two Frutarom Acquisitions

Frutarom, the Israeli flavors and specialty ingredients firm, has added two more companies to its growing stable of firms worldwide – Pollena-Aroma of Poland, for $8.5M and 51% of Brazil’s Bremil for $31M. In addition, Frutarom recently completed the $270M acquisition of Israel’s Enzymotech.

Science & High Technology

Railway Network

Nokia and Motorola have been awarded a contract to provide and maintain a special closed cellular network for the management of Israel Railways traffic. The project is designed to enhance safety on Israel’s entire rail system.

Indian Firm’s Tech Center

L&T Technology Services, an Indian engineering firm, is establishing a new “center of excellence” in Jerusalem. The center will develop hardware and software-based solutions and next-generation video solutions for media, entertainment, telecom, automotive and information technology global customers of the Indian firm.

Israel-China Accelerator

Ten Israeli start-ups – Anzu, Social internet, TechsoMed, I know first, TapReason, Modcon, Gencell, Personalics, Pom Vom, and Watteam – have been chosen for the new Israel-China accelerator program in Beijing, led by the Ministry of Economy and Industry and China’s Shengjing Group and DayDayUp. The accelerator is designed to help Israeli companies adapt to and penetrate the Chinese market.

India Order

Tel Aviv-based Ceragon Networks says it has received orders totaling $66M for its IP 20 platform from a Tier 1 operator in India. Indian operators have placed more than $100M in orders with the Israeli firm during the second half of 2017.

Anti-Bacterial Sheeting

Polycart Medical, a subsidiary of Polycart Technologies based in Kibbutz Tzuba near Jerusalem, reports that its antibacterial sheeting is already in the early stages of marketing in China. The sheeting can be used to assure the sterility of any space, including in hospitals.

Bone Breakthrough

In a medical breakthrough, some describe as straight out of science fiction, doctors at the HaEmek Hospital in Afula, a small city in northern Israel, have regrown part of a human bone in artificial conditions and successfully implanted it in a patient. The doctors took fat cells from the patient, grew them in a lab and reinjected them into his body where they generated part of a bone damaged in an accident. The first-in-the-world procedure was developed several years ago by Bonus BioGroup, an Israeli biotechnology company, in which the bone cells are grown in a bioreactor, a device that simulates the environment inside the human body and provides optimal condition for bone generation. The process yields tissue that can be transplanted in the patient’s body and regrows the missing parts of the bone.

Aerospace & Defense

Missile Defense in U.S. Defense Budget

The $700B defense policy bill signed by President Trump on December 11 includes over $300M for Israeli missile defense programs and $25M for the U.S.-Israel tunnel defense program. According to the Israel Defense website, the budget cannot go into effect until Congress bypasses a 2011 law limiting 2018 U.S. defense spending to $549B. The approved budget allocates $92M for procurement of Tamir interceptor missiles for the Iron Dome system, $120M for the David’s Sling intermediate-range missile defense system and an additional $120M for Arrow 3 defense against long range missiles. The bill stipulates that at least half of co-production of all systems will be in the U.S.

Elbit, IAI Backlogs Up

Elbit Systems, Israel’s largest private defense contractor, reported an $800M increase in its orders backlog from $6.8B in September 2016 to $7.6B in 2017. At the same time, Elbit said its third quarter revenues amounted to $800M, up from $780M in the parallel quarter of 2016.

Meanwhile Elbit Systems Australia has won a follow-up order to supply communications and control systems for the Australian Army’s Land 75/125 program. Value of the contract was not announced.

Government-owned Israel Aerospace Industries said that new orders amounting to about $4.5B since the start of 2017 had increased its orders backlog to a record $10.8B. IAI’s third quarter sales totaled $840M.

Iron Dome for Falklands

The UK has decided to purchase Israel’s Iron Dome missile defense system to defend its Falkland Islands territory in the South Atlantic. The $100M procurement from Rafael Advanced Defense System, which developed Iron Dome using software from mPrest, another Israeli company, came after the French sale of advanced aircraft to Argentina, which invaded the Falklands and fought a brief war with the UK in 1982. The British have given the name Sky Sabre to their installation of Iron Dome.

Meanwhile, the Israel Navy and Air Force have staged a complex trial of Iron Dome missiles mounted on the deck of a naval vessel. Iron Dome interceptors fired from the deck of the INS Lahav Sa’ar Clas corvette successfully destroyed missiles launched from land and sea in a test simulating attacks on Israeli vessels by Gaza-based terror groups during 2014’s Operation Protective Edge.

Is Spike Deal Off?

Rafael Advanced Defense Systems says it has received no notice that Prime Minister Narendra Modi’s government is about to cancel a $500M deal to purchase Spike anti-tank missiles manufactured by Rafael. According to the reports, the Indian government has asked its Defense Ministry to develop a home-grown domestically manufactured missile, in order to develop domestic defense industries.

Last year, India chose Rafael’s Spike in preference to U.S.-made Javelin missiles. Rafael recently opened a plant in India, together with a local firm, apparently to produce at least some of the 8,000 Spikes and 300 launchers involved in the deal.

Details may become available in mid-January, when Prime Minister Netanyahu visits the Subcontinent.

Used F-16s to Croatia?

Israel and Sweden have been shortlisted in a tender to sell warplanes to Croatia, according to Israeli and Croatian media reports. Israel, which is offering second-hand Lockheed Martin F-16 warplanes and Sweden, with Gripen made by Saab, were left in the running after the Croatian government eliminated two other offers, of new F-16s from Lockheed Martin and second-hand F-16s from Greece. Croatia is seeking to replace Soviet-made MiG 21 jets, which have remained as the backbone of its air force.

According to Globes, the F-16s that Israel is offering have been significantly upgraded with radar from Elta, an Israeli Aerospace Industries subsidiary, and cockpit systems from private defense contractor Elbit Systems. The Israeli jets can also be fitted with Rafael Advanced Defense Systems Python rockets.

Arrow 3 Test Cancelled

Problems with the Sparrow target missile caused cancellation of a complex test of Israel’s Arrow 3 air-defense system on December 4, the Defense Ministry announced. The test, planned long in advance, should not affect Arrow 2 and 3 systems, which are already operational.

IAI Reorganization Eyed

Intensive discussions of a possible reorganization of Israel Aerospace Industries‘ civilian businesses are underway, according to a report in Globes. The paper said that Harel Locker, the government-owned firm’s new chair, centers on consolidation of IAI’s Bedek Aviation Group with the company’s civilian aircraft and engineering divisions into a new body dealing mainly with civilian aviation. About a third of IAI’s 15,000 workers are employed in the three existing divisions.

Elbits New Smart Scope

Elbit Systems is introducing XACT, a new smart scope that increases the accuracy of rifle fire. According to a report in Yediot Aharonot, the scope, using Android technology similar to that of a smartphone, transmits a live feed of what the soldier sees through it to his (or her) commander and other soldiers in the field.

All-Female Tank Crews

13 female graduates of an Armored Corps course are being deployed in southern Israel as part of a pilot program aimed at full gender integration in the corps. The all-female tank crews are not being formally integrated into the Armored Corps’ combat brigades — like the 188th, 7th and 401st Armored Brigades — but will serve in the newly formed Border Defense Force, tasked with securing Israel’s borders, but not cross them.

Hercules Contract

Elbit Systems has been awarded a $74M, 13-year contract for a new training center for Hercules cargo aircraft, called Shimshon and Karnaf in Hebrew. The center will be established in the Negev, near the training site for the new F-35 aircraft of the Israel Air Force.

Rada Revenue Rises

Revenues of Rada Electronic Industries rose by 93% in 2017’s second quarter and 91% over the first half of the year, largely due to sales of tactical radar systems. According to the Techtime Hebrew website, Rada has raised its growth projections to $25M for 2017, double the 2016 figure.

Drone Threat

Israel is not adequately prepared for the threat posed by small unmanned aerial vehicles, State Comptroller Yosef Shapira said in a special min-November report. Although use of small UAVs has increased in recent years, Sharpra said that the IDF and the Israel Police have not taken adequate steps to regulate their use.

Cyber Exports

Exporters of cyber products are among the beneficiaries of revised Defense Ministry regulations shortening the list of products which must be given ministry permission to be sold abroad. The changes, applicable to hundreds of cyber and electro-optic systems and tools as well as training in security and anti-terrorism measures, apply to exports to 102 countries on a list of permitted countries compiled by the Defense and Foreign ministries.

Honduras Buys Elbit UAVs

Honduras has purchased six Unmanned Aerial Vehicles from Elbit Systems. According to a report in El Heraldo newspaper, three systems, each including two UAVs, are due to be delivered by the end of next year. The report does not specify price or what UAVs are involved, other than to say that the Central American country will receive more than one type of aircraft. In early December, a group of Israeli citizens urged that arms sales to Honduras be halted, due to unrest following the controversial reelection of President Jan Orlando Hernandez in November.

IDF Staff Appointments

Chief of Staff Gadi Eizenkot has named Maj.-Gen, Herzi Halevi, the current chief of Military Intelligence, as the next head of the IDF’s Southern Command. Maj.-Gen Nadav Padan, former head of the Cyber Security and Defense Directorate, becomes O/C Central Command, and Maj.-Gen. Tamir Heyman takes over as Military Intelligence chief.

Privatization Talks

Talks on privatization of government-owned Israel Military Industries to Elbit Systems were renewed in mid-November, as Elbit executive and Treasury officials discussed the price the private defense contractor will pay. Meanwhile, state-owned Rafael Advanced Defense Systems and Israel Aerospace Industries expressed concern over the effect of the sale on bidding for Israel Defense Forces contracts. Elbit, Israel’s largest private defense contractor, emerged as the sole bidder in competitive bidding to buy IMI.

Galilee Center

Rafael Advanced Defense Systems has opened a new R&D center in the Galilee. The center, located in the Misgav Industrial Zone, will employ about 100 engineers, concentrating mainly on cyber, artificial intelligence and big data.

African Sale

Aeronautics, based in Yavne south of Tel Aviv, has sold unmanned aerial vehicles to an unnamed African country for $13M. Delivery and payment are to be completed within 18 months.

Druse Gets Territories Post

Kamil Abu-Rukun, a reserve major general, has been appointed the new coordinator of government activities in the territories. From the Druse village of Issafiya near Haifa, Abu-Rukin, 58, takes over from Maj. Gen. Yoav Mordechai, next spring.

UAV Data

Sensitive parts of an Israeli-made unmanned aerial vehicle that came down over Tibet may have reached the Chinese Army, according to reports in the Indian media. According to foreign sources, India has purchased Heron UAVs made by Israel Aerospace Industries. Israeli military sources note that most such UAVs can be destroyed by their operators from considerable distance.

Arrests in Defense Scam

Israel Police arrested about 20 people, including Defense Ministry officials, IDF officers and employees of two technology firms in connection with a NIS 100M fraud involving the sale of telecommunications equipment that was never delivered. The two Israel firms, both telecom suppliers, are Giltech and Unicom. No other details were released.

Student Space Project

Students of the Rogozin High School in Kiryat Ata, a Haifa suburb, have been chosen to participate in a project sponsored by the Israeli Space Agency and the Ministry of Science and Technology. As part of the project, the students will build and maintain a nano-satellite, with the help of professional scientists and engineers.

Fords for IDF

There are Fords in the IDF’s future. The Defense Ministry’s purchasing mission in New York has bought 290 Ford F150 and F50 light and medium trucks. The vehicles will be deployed with the IDF Ground Forces Command in the coming months.

Argentine Border Post

Israel Aerospace Industries recently completed installation of the first of four border control stations in Argentina. The installation, at the La Quiaca crossing, includes communications, sensors, and radar equipment from IAI’s Elta subsidiary. IAI’s contract with the Gendarmeria, the Argentine border police, includes three other stations in different terrain conditions. Price was not disclosed, but is estimated in tens of millions of dollars.

Meanwhile, Elbit’s U.S. subsidiary was awarded a contract to provide support services for U.S. Army C-26 and UC-35 aircraft. The contract together with DynCorp International is worth $25M in its first year. Together with KBR of the UK, Elbit runs a pilots’ training program for Britain’s Royal Air Force.

U.S. Army’s Trophy Role

The U.S. Army plans to equip its Abrams battle tanks with Israel-developed Trophy Active Protection Systems (APS) by 2020, a military official told the Future Combat Vehicle Summit, held in the U.S. of December 1. The official, Col. Kevin Vanyo of the Army’s Tank Automotive Research, Development and Engineering Center, said that the Trophy option for the Abrams was one of three under consideration for armored vehicles, together with Iron Curtain APS (made by Artis) for Stryker APCs and Israel Military Industries‘ Iron Fist APS for Bradley fighting vehicles. Trophy, developed by Israel Aerospace Industries‘ Elta Group and Rafael Advanced Defense Systems, has been operational on IDF Merkava battle tanks since 2009, where it is known as Windbreaker. General Dynamics is the U.S. contractor.